Congress Reaches For Solution On Debt Ceiling

President May Ok Bill With `Strings'

WASHINGTON — With another partial shutdown just averted, it's time to consider the next looming emergency for a government that lurches from crisis to crisis: the national debt ceiling.

Congressional Republicans recently relented on their threat to let the country experience its first-ever default on debt repayments if the Clinton administration didn't accept their terms for balancing the federal budget and other policy matters.

But Congress, which has constitutional responsibility for the debts, still wants President Clinton to commit to spending cuts before it increases what the federal government legally can borrow. The U.S. debt, and debt limit, stand at $4.9 trillion. That's nearly $20,000 of debt for each American, the Treasury Department says.

Still smarting from the public relations drubbing they took for two partial shutdowns last year, and convinced that Clinton doesn't really want to balance the budget, GOP lawmakers are frustrated but hopeful. They view the debt fight as a last-ditch, pre-election bid to get some of the budget savings they sought through their seven-year, balanced-budget plan.

The U.S. government reached the debt ceiling, which can be compared roughly to a credit-card limit, in November. That nearly $5 trillion represents the sum of all the nation's publicly issued and unpaid debt. Each year's budget deficit, financed through the sale of government bonds, is heaped atop the existing debt.

Since November, Treasury Secretary Robert Rubin has evaded default by juggling the nation's finances. In December, for instance, he "borrowed" $14.5 billion from the Civil Service Retirement Fund, providing it with an IOU. Because the debt limit applies to publicly issued debt such as Treasury bonds, the retirement fund borrowings do not count against the debt ceiling.

Those end runs around Congress angered GOP lawmakers, who thought the president would submit to debt-ceiling pressure, as his predecessors had.

"The debt ceiling has been used consistently by Democratic congresses," said Rep. Nick Smith, a Michigan Republican who heads the House's debt-ceiling task force. "Every time they've had a Republican president, (Democrats) tied the debt ceiling to tax increases. So it's not new."

Smith said Republicans "developed our strategy based on what past presidents had done. Some of the decisions of this president seemed to be more political than otherwise and screwed up the logic of the strategy a little bit."

Rubin has said he soon will run out of legal dodges to avoid exceeding the debt limit. He also has flatly ruled out some options, like selling off part of the nation's gold reserves or delaying tax refunds.

Thus, he and other Treasury officials lately have been warning of imminent fiscal danger if Congress doesn't soon raise the debt ceiling.

March's Social Security checks will bounce, he said, if Congress does not approve a new debt ceiling by the end of February. Rubin said that, by law, he must mail those checks Feb. 26, come what may.

And while Republican congressional leaders have taken pains in recent weeks to reassure the nation they would not permit a default, the administration acts as though it's far from convinced.

"There is no way of avoiding the fact that if a clean debt limit bill is not enacted by March 1 at the very latest the U.S. will join Myanmar, Angola, Argentina, Venezuela, Brazil, Vietnam and Russia on the short list of nations that have defaulted on their own currency," Deputy Treasury Secretary Lawrence Summers told a Capitol Hill hearing hosted by Democratic lawmakers hosted on Tuesday.

A "clean" debt-ceiling bill, or one without any additional conditions attached, is the White House preference. In recent months, Congress has sent two debt-limit bills to the White House. One included the GOP's balanced-budget legislation; the other would have reformed debt-limit laws to prevent a president from juggling books to get around the ceiling.

"Congress has twice fulfilled its responsibility on the issue of extending the debt," said Ari Fleischer, spokesman for the House Ways and Means Committee chaired by Rep. Bill Archer (R-Texas). "Twice we've been met by vetoes because it wasn't the president's way and only the president's way."

In recent days, administration officials have expressed a willingness to accept a debt-limit bill with some strings attached.

Specifically, the White House accepts in principle the GOP idea of tacking onto the debt-limit bill a provision for a "down payment" toward balancing the budget; that is, reduced spending levels.

"Chairman Archer is encouraged that the White House reaction is that we should not send more debt to our children without giving our children something in return," Fleischer said. "The chairman doesn't think there's anything clean about sending more debt to our children."